Sayona Mining Ltd (ASX:SYA) has started a definitive feasibility study (DFS) for the Authier Lithium Project in Canada.
This follows an optimised prefeasibility study (PFS) which the company said had demonstrated excellent returns including a net present value of C$221 million.
The PFS estimates an internal rate of return of 56% and capital payback period of 2.5 years with life of mine revenue estimated at C$1.322 billion.
It incorporates an updated ore reserve and mineral resource along with results from technical optimisation studies and realignment of pricing.
PFS demonstrates financial viability
The PFS demonstrates the technical and financial viability of constructing a simple, low-strip ratio, open-cut mining operation and processing facility producing spodumene concentrate.
The initial capital cost estimate to construct a 700,000 tonnes per annum process plant is C$64 million, C$2 million less than estimated in the February 2017 PFS.
These figures are based on sales of 1.6 million tonnes of concentrate over 17 years.
READ: Sayona Mining commences drilling to complete DFS
The DFS is expected to be completed early next year with a diamond drilling program underway to collect a large sample for pilot metallurgical tests and resource expansion objectives.
Authier now has proven and probable ore reserves of 11.66 million tonnes at a grade of 1.03% lithium oxide for 120,098 tonnes of lithium.
Authier North deposit included in resource
The Authier North deposit has been included in an updated resource estimate of 18.35 million tonnes at 1.02% for 186,953 tonnes of lithium.
Significantly, 88% of the estimate is in the measured and indicated categories and there is potential to expand the resource through further drilling.
The Authier project is 45 kilometres northwest of Val d’Or, a major mining service centre in the Province of Quebec.
It is easily accessed by a rural road network connecting to a national highway a few kilometres east of the project site.
READ: Sayona Mining receives further positive lithium metallurgical test results
Lithium concentrate produced from Authier will be classed as chemical grade specification.
The principal markets for chemical grade concentrates are battery, lubricants, aluminium smelting and pharmaceuticals applications.
Sayona is exploring a number of options for selling high-quality Authier spodumene concentrate.
This includes direct sales of concentrate to converters that produce lithium products suitable for global battery markets.
Positive outlook for lithium
The outlook for lithium demand is positive according to an estimated demand growth of circa 19% between 2016 and 2025.
This would represent total demand of 874,000 tonnes of lithium carbonate equivalent in 2025.
A major demand shift is driven by the increasingly critical role of lithium-ion battery technology for storage applications in the automotive, consumer electronics and electricity storage/distribution sectors.
READ: Sayona Mining shares surge on Chinese battery discussions
In November Sayona signed a non-binding memorandum of understanding (MoU) with leading China-based battery manufacturer, Huan Changyuan Lico Co Ltd.
Huan Changyuan, a subsidiary of the Fortune 500 company, China Minmetals Group, is a battery research, development, and production company.
The MoU paves the way for advancing discussions to facilitate a development alliance exploring marketing, technical and financial opportunities for the Authier project.